Christie vetoes bill allowing employer deductions of intern wages

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April 2, 2013 at 1:14 PM

Gov. Chris Christie this week conditionally vetoed legislation that would have allowed businesses to deduct the wages of interns against their tax liabilities, saying the bill's costs outweigh its unproven benefits.

Christie recommended further study before reconsidering the bill, which is touted as a way of improving skills and job prospects for young workers and has not been a hotly contested issue among business advocates.

The bill would have allowed employers to take a tax credit against their corporate business tax or gross income tax liabilities for wages paid to qualified interns in tax years 2013 and 2014. But the legislation is estimated to cost $7 million in revenue over the next two years; Christie said that's too big a risk without evidence the tax credit works.

"While I support the concept of increased employment opportunities for future college graduates, the Legislature has offered no data to show that this type of tax credit will actually lead to increased long-term employment," Christie said in a message accompanying his veto.

Christie recommended the Department of Labor and Workforce Development conduct a study on the effectiveness of such programs, including comparisons with other states that have similar policies, within a year.

The bill sought to allow credits of 40 percent of compensation paid to qualified interns, up to a maximum of $600. Taxpayers that employ three or more qualified interns in a tax year receive a $75 bonus per qualified intern.

Sponsors say the bill would "encourage business to hire post-secondary students to learn firsthand about their chosen field of study and help them get their foot in the door to eventually secure full-time employment."

The state's major business groups have not taken sides, preferring a wait-and-see approach instead.

"I think it needs study before making any firm commitment of funds," said Michael Egenton, senior vice president of government relations for the New Jersey Chamber of Commerce. "It is a reasonable request from the governor since we are in tight fiscal times."

John Galandak, president of the Commerce and Industry Association of New Jersey, said he would like to see evidence such policies encourage students to remain in the state for their working careers.